Money laundering, the main features of the offence and its criminal treatment following Law 4816/2021. The offence of legalisation of proceeds from criminal activities (or, as it is commonly known, «money laundering») is provided for, following a series of legislative amendments, in Law 4557/2018 as currently in force (following amendment by Law 4816/2021, which transposed EU Directive 1673/2018). Below we shall attempt, briefly, to describe the main features of the offence, its criminal treatment, as well as relevant concerns that arise particularly with regard to when assets become «tainted» and consequently constitute proceeds of laundering, depending on the type of prior criminal activity (the so-called predicate offence under the law), with the further risk of their freezing.
1. Introduction: The offence of legalisation of proceeds from criminal activities, money laundering, is provided for in Law 4557/2018, which was recently amended by Law 4816/2021, following the Greek legislator’s compliance with Directive 1673/2018 (EU) of the European Parliament. For its constitution, the commission of a temporally and substantively prior punishable act is required, the so-called predicate offence, namely the offence from which the property to be laundered derives. The predicate offences are criminal acts expressly enumerated in the law (see Article 4 of Law 4557/2018) (indicatively: criminal organisation, bribery and active and passive corruption of officials, human trafficking, fraud, theft, robbery, forgery, sex trafficking, illicit drug trafficking, smuggling, tax evasion, non-payment of debts to the public treasury, breach of trust, stock exchange offences, etc.), as well as any offence for which the law threatens a custodial sentence of at least three months and from which a financial benefit derives.
This is an offence, money laundering, which is frequently encountered in practice and in various forms, while it primarily reflects the basic idea «the crime doesn’t pay», in the sense that the perpetrator of an unlawful act must not derive profit from it. By the term «laundering», in short, we mean the process by which the traces of the criminal acts from which the illicit proceeds derived are concealed or eliminated, so that they can subsequently be used in the official economy «disguised» and mixed with legitimate money. According to official reports of the intergovernmental Financial Action Task Force on Money Laundering (FATF), the legalisation of proceeds from criminal activities takes place mainly through (a) the establishment and operation of shell companies, (b) the exploitation of specialised knowledge of certain professional groups (such as notaries, tax advisers, business consultants, etc.), (c) investments in real property, works of art and luxury goods, (d) the establishment and operation of trusts and foundations, (e) the establishment and operation of offshore companies, and (f) the establishment and operation of informal money transfer systems.
- The means of commission of the offence following Law 4816/2021: In Article 2 of Law 4557/2018 we now find the four means of commission of the offence, which is committed by anyone who, in the legislator’s wording, engages in:
(a) conversion or transfer of property in the knowledge that it derives from criminal activity, or from an act of participation in such activity, with the purpose of concealing or disguising its illicit origin, or of providing assistance to any person involved in such activity in order to evade the legal consequences of his acts (example: transfer to a third party of a vehicle deriving from theft or robbery committed by the seller or by a third party, in any event with the seller’s knowledge),
(b) concealment or disguise of the truth, as regards the nature, origin, disposal, movement or use of property or the place where it is located or the ownership thereof, or the rights related thereto, in the knowledge that such property derives from criminal activity or from an act of participation in such activity (example: placing money deriving from the offence of fraud in safe deposit boxes of private security companies),
(c) acquisition, possession or use of property, in the knowledge, at the time of acquisition or at the time of taking possession or use, of the fact that the property derives from criminal activity or from an act of participation in such activity (example: possession of money deriving from smuggling without transferring possession to a third party and without taking precautionary measures to place it. It is understood that the legislator, by this means of commission, attempts to criminalise any other case that does not fall within the first two categories of criminal action),
(d) use of the financial sector through the placement therein or movement therethrough of proceeds deriving from criminal activities, with the purpose of giving an appearance of legitimacy to such proceeds (example: depositing money deriving from breach of trust against a legal person into multiple accounts, further movement thereof through their incorporation into bank cheques and endorsement to other natural or legal persons).
It is worth noting that the so-called modalities of organising laundering (namely the establishment of an organisation or group of at least two persons for the commission of the above acts under (a)-(d)) and the attempt to commit laundering, the incitement, facilitation or provision of advice for its commission, no longer (following Law 4816/2021) constitute separate means of commission of the offence, since the claim for criminal punishment is already covered by the provisions of the Penal Code (PK).
As regards the fourth means of commission of the offence of money laundering, namely through use of the financial sector, lively concern has arisen concerning the question of whether this is at all possible, given the heightened obligation of banks to detect and report suspicious and unusual transactions. According to case law, «a particularly sensitive point of the entire operation is the financial system itself, which, through the accounting recording of the flow of capital and the substantive disappearance of the identity of natural persons, through various companies, in combination with the operation of banking secrecy, can very easily cover the traces of the origin of illicit money and ultimately allow reinvestment in seemingly lawful activities» (Athens Misdemeanours Council 2912/2004).
Thus, the mere deposit of illicit money into a bank account, without being accompanied by other special circumstances (such as, for example, the opening of the relevant account in a false or non-existent name, the carrying out of complex transactions, the interposition of companies, fictitious remittances, etc. — given that in those cases there would indeed be a purpose of concealment) — has, rather, the opposite results to those which the perpetrator of laundering wishes to achieve.
In essence, in this manner and on account of the above heightened duty of care and supervision of banks over suspicious transactions, traces are created enabling the detection of illicit property and, since such acts cannot be subsumed under the other means of commission of the offence, they ought to be deemed unpunishable.
According further to the judgment of the Athens Misdemeanours Council 4304/2015, the inability of the account holder to justify the origin of monetary amounts does not entail constitution of the offence under examination through this means of commission, if it is not also inferred from other circumstances. Likewise, the deposit of money by the perpetrator of laundering into a joint bank account does not, without more, mean commission of laundering by the joint holder, because the joint account may be opened only by one person and in the name of another, while it may be used by all joint holders without the cooperation of the others (Athens Court of Appeals Council 349/2015).
3. The criminal treatment of the offence of money laundering following Law 4816/2021:
Article 39 of Law 4557/2018 provides for the criminal sanctions threatened against perpetrators of the offence of legalisation, money laundering. More specifically, Article 39(1)(a) of the law sets out a general clause according to which the perpetrator of acts of laundering is punished, as a rule, with felony penalties (imprisonment up to 8 years and a monetary penalty). Imprisonment up to 10 years and a monetary penalty are imposed on the perpetrator of laundering if (a) the illicit financial benefit exceeds €120,000, (b) it is committed by persons obliged to report suspicious transactions in the exercise of their activity (indicatively: representatives of financial institutions, certified auditors-accountants, notaries, etc.), and (c) the illicit property derives from felonies specifically referred to in the law (indicatively: criminal organisation, terrorist organisation, drug trafficking, robbery, etc.). Imprisonment (i.e. a custodial sentence of 5 to 15 years) and a monetary penalty are imposed on anyone who commits an act of laundering as a profession or as a member of a criminal organisation. However, where the prior criminal activity is a misdemeanour, a sentence of imprisonment up to three years and a monetary penalty are imposed. Pursuant to Article 39(4) of the law, the acquittal of the perpetrator for the predicate offence also entails his acquittal for the offence of legalisation of proceeds.
4. Cases of release from the «tainted» stigma — Who does not commit laundering:
Assets deriving directly from criminal activity are amenable to laundering, even, that is, if they end up in the hands of a third person who does not have the capacity of perpetrator (principal or accomplice) in the prior criminal act, since they are «tainted». However, as inferred from Article 40(1)(c) of Law 4557/2018, assets cease to be «tainted» when acquired by a person who does not know that they derive from prior criminal activity (when, that is, they are acquired by the so-called «bona fide third party»). Thus, in practice, we have two consequences: (a) the bona fide third party who acquires the unlawful asset does not commit the offence of laundering (the existence of knowledge being assessed at the time of acquisition of the asset and not subsequently), and (b) anyone who acquires from a bona fide third party also does not commit laundering, even if he is aware of the criminal origin of the asset, because of its prior «cleansing». Subsequently, of course, the «sanitised» product may obviously constitute an asset amenable to laundering in the context of a new, subsequent criminal activity (Examples for money laundering or non-laundering: A donates a painting to B without B knowing that it is the product of embezzlement. A does not commit laundering. If A in turn donates the painting to her friend F, again there is no act of laundering, even if F knows that it derives from criminal activity. Finally, if A or F donates the painting to a public official in order to secure favourable treatment in a case, then the product reacquires the quality of deriving from criminal activity — bribery this time — and is, in this context, the product of laundering connected, now, with the latter criminal activity.
5. Commission of the offence of money laundering where the predicate offence is tax evasion: The principal concern that arises in this regard from the inclusion of tax offences in the list of predicate offences of the laundering law is whether the cost saving achieved by the perpetrator through tax evasion can be subsumed within the concept of property deriving from the predicate offence and whether the amount of tax which the perpetrator failed to pay to the tax authority constitutes «tainted» property. The two above concerns are based, on the one hand, on the statutory definition of the concept of property, which includes an increase of assets and not avoidance of a reduction thereof, and, on the other hand, on the premise that the property which the perpetrator saves and which is equal to the amount of tax he avoided paying to the tax administration does not derive from the offence of tax evasion, but on the contrary pre-exists that offence as lawful property, which cannot be rendered retroactively «tainted», namely following non-fulfilment of the obligation to the tax administration and commission of tax evasion (example: An accountant, in the context of his lawful professional activity, fails to file an income tax return for his earnings, nor periodic VAT returns for transactions with the clients of his accounting firm. At the time of receipt of the income, as well as of the corresponding VAT, and before the deadlines for filing the relevant returns expire — upon the lapse of which the commission of the offence of tax evasion is determined — he has already channelled into the market the capital received, which, at the time of receipt, was «clean» and cannot, therefore, be rendered «tainted» retroactively so as to raise an issue of laundering, since it was lawful from the outset). Of course, exceptions are the cases of receipt of refund of VAT or other taxes by deception of the tax authority and the issuance for remuneration of fictitious or forged tax documents, since in these cases there is indeed an increase in the perpetrator’s property and not avoidance of its reduction.
Accepting the impossibility of committing laundering with tax evasion as the predicate offence, decision No. 112/2016 of the Athens Misdemeanours Council ruled accordingly, stating that «In most cases of tax evasion, the commission of laundering is not possible due to the absence of property deriving from criminal activity (see definition of property in Article 4(1) of Law 3691/2008); the criminal origin is provided in all means of commission of Article 2 as an element of the actus reus (in the means of commission of paragraph 2(a), (b) and (c), the relevant element of the actus reus arises indirectly from its mention as the object of the perpetrator’s knowledge; on the contrary, in case (d), the origin of the property from criminal activities is expressly provided as an element of the actus reus). More specifically, the benefit, the enrichment of the tax evader, does not constitute property and indeed property deriving from tax evasion, and as a logical consequence there is no material object or, more generally, asset amenable to laundering (cf. G. Triantafyllou, op. cit., p. 722 et seq.). In other words, for the constitution of the actus reus of laundering of proceeds from a criminal act, money laundering, the existence of property income is required, and the patrimonial benefit in the form of avoidance of reduction of the perpetrator’s property from the commission of some criminal act does not suffice (Athens Misdemeanours Council 2175/2005, PoinDik 2005, p. 1151); consequently, the cost saving of the perpetrator of tax evasion, namely the benefit (see Article 904 et seq. of the Civil Code (AK)) which is equal to the amount of tax which he avoided paying, cannot be the object of laundering. Accordingly, in respect of saved expenditure, it follows that no act of laundering can take place. On the contrary, property deriving from the predicate offence of tax evasion can exist only in the case of an increase of the assets of the perpetrator’s property (e.g. acquisition of ownership of a thing or of a claim); this can occur only in the case of receipt of refund of VAT or other withheld and shifted taxes, levies and contributions through misleading the tax authority, since in this case the perpetrator directly and immediately acquires property deriving from the commission of tax evasion; likewise conceivable is the commission of laundering in the case of issuance of fictitious and forged invoices, when the perpetrator receives remuneration for their issuance from the beneficiary, since the object of laundering is not some amount of tax but the perpetrator’s own remuneration».
6. In particular, the freezing of assets by the President of the Anti-Money Laundering Authority for legalisation of proceeds from criminal activities prior to the acquisition of the status of defendant, and the means of defence of the person against whom it is directed: Article 42(7) of Law 4557/2018 provides for the possibility of freezing bank accounts, securities, safe deposit boxes and financial instruments in general, as well as the prohibition of transfer of any asset, following the issuance of an order by the President of the Anti-Money Laundering Authority. The conditions for the application of the provision are (a) the conduct of an investigation by the Authority for the detection of acts of laundering or predicate offences, (b) the existence of well-founded suspicions that a predicate offence or act of laundering has been committed, and (c) the existence of an urgent case (e.g. risk of immediate disappearance of assets through successive transfers and concealment of traces of the perpetrators’ offences). This is a measure taken by the Authority against a suspect in order, in the context of its investigation, (a) to gather information and evidence on the commission of predicate offences and acts of laundering, and (b) to immobilise the suspect’s assets, keeping them intact and preventing him in particular from using the financial (banking) system.
It is worth noting that this measure may be ordered prior to any judicial proceedings and even before the perpetrator acquires the status of defendant following the bringing of criminal prosecution for money laundering. The person against whom the measure has been imposed has absolute legal inability to dispose of and use the frozen assets. He may, however, (a) file the petition provided for in Article 42(4) of Law 4557/2018 before the competent judicial council within a 20-day period from service of the Authority’s order, requesting the lifting or limitation of the freezing (because, for example, the frozen property has lawful origin, such as where it was acquired prior to the commission of the predicate offence, or because it is not connected with the benefit allegedly obtained, as is the case for example with frozen salaries and pensions, or is absolutely necessary for the suspect’s livelihood, etc.), and (b) request the issuing authority to revoke the order issued due to the existence of new circumstances concerning the suspect or members of his family.
Indeed, courts lift the imposed freezing where the statutory conditions for its imposition were not met. Specifically, by decision of the Athens Misdemeanours Council 3216/2019, it was held that bank deposits entering accounts with a guaranteed lawful origin, undisputedly evident also from their relevant description, cannot constitute the product of laundering. The extract of the decision reads verbatim as follows: «Specifically, from the statement of movement of the frozen account it appears that, fortnightly, the salary of the applicant, as a public servant of the Ministry of Infrastructure and Transport, is deposited therein by the said public body, with the description ‘salary’. The monetary amounts which are periodically deposited into the said bank account, with the above ascertained origin, being salary from a public organisation, by definition, according to the teachings of common experience and the rules of logic, cannot be related to unlawful activity of legalisation of proceeds from criminal activity, namely passive bribery in the present case, nor constitute the offspring of any such unlawful practice».
Furthermore, by Athens Misdemeanours Council 3721/2017, it was accepted that the frozen property cannot derive from criminal activity since it was acquired prior to the alleged time of commission of the predicate offence. The decision held in particular as follows: «Accordingly, it appeared that, on the one hand, … son of … did not have in his possession any property during the years 2008-2016 (the period during which the offence of laundering of the product acquired from the predicate offence may have been committed), which he either alienated or otherwise concealed or commingled with other assets of his or transferred to third-party accounts etc., with the result that there are no, with regard to him, at least at the present stage, sufficient indications of commission of the offence by virtue of which the said assets of his were frozen by the Authority on grounds of urgency, which assets are obviously not related to the offence under investigation by the Authority, since they had been acquired at a time long prior to the commission of the predicate offence. It is noted that the most recent contract referred to in the order of the President of the Authority under examination is contract No. […]/2014 establishing horizontal properties (condominium), which, however, came into the ownership of the second applicant several years earlier, namely by virtue of contract No. […]/2.8.2003. On the contrary, … son of … acquired immovable property during the period in question, but certain properties which came into his ownership and are described in the order under investigation had been acquired at a time long prior to the commission of the predicate offence. Accordingly, we are of the view that Your Council should accept, both as to form and substance, in part, the application dated 29.5.2017 of … son of …, and accept, both as to form and substance, the application dated 9.6.2017 of … son of …, and lift, otherwise revoke, order No. […]/2017 of the President of the Authority».
Finally, the release of assets for reasons of meeting the basic living needs of the alleged suspects is very common. On this issue, the Areios Pagos Council 1374/2020 ruled that «Such freezing, however, without description of the assets and the purpose they fulfil, does not satisfy the purpose of the law, since it cannot be assessed whether they may be used for the financing of terrorism, nor whether from them and any income they generate the petitioner covers his general necessary expenses of living, maintenance or operation, the expenses for his legal support and the basic expenses for the maintenance of the frozen assets. Given these facts, and in view of the fact that by the present petition and his memorandum the petitioner has identified the principal request of the petition as the release of his two accounts, namely the account of … at Piraeus Bank, with a balance amounting on 27-7-2020 to €889.68, and the account of … at Eurobank, with a balance amounting on 27-7-2020 to €1,334.02, in order to meet his livelihood needs, it must: (a) the present petition be accepted, (b) decision 26/25-6-2020 of the B’ Unit of the Anti-Money Laundering Authority for Proceeds from Criminal Activities be amended, by which his (the petitioner’s) application of 10-6-2020 before the B’ Unit of the Anti-Money Laundering Authority concerning the lifting of the freezing of his assets and of the prohibition of movement of accounts … was rejected».
7. By way of conclusion: From what has been set out, it becomes clear that the criminal provisions of Law 4557/2018 under examination describe one of the offences most difficult to typify because of its complexity and the variety of its manifestation in practice. Many of the predicate offences described in the list of Article 4 raise concerns as to whether they can produce «tainted» property. Such are the tax offences mentioned herein. The truth is that, through the relevant multifaceted legislation, the legislator attempts to identify every form of laundering (including in the predicate offences even cases that cannot be reconciled with the rest of the legislative assessments and definitions) and to anticipate every criminal manoeuvre of perpetrators. Furthermore, the prosecuting authorities, with exceptional frequency, take onerous measures of procedural coercion against suspects over the totality of their assets, indiscriminately, often freezing also property of lawful origin. Nevertheless, through the appropriate legal remedies provided to the defendant and following appropriate legal support, the latter may demonstrate the lawfulness of his transactions and demand the correct interpretation and application of the relevant criminal provisions.
- See also the article Child Pornography
- See also the article Defamation via Facebook
- See also the article Online Fraud
- See also the article Computer Fraud
- See also the article Hacking
- See also Methods of Online Attacks
FREQUENTLY ASKED QUESTIONS ON MONEY LAUNDERING
1. What sentence am I facing if I am charged with money laundering?
The offence of legalisation of proceeds from criminal activities (Article 39 of Law 4557/2018, as amended by Law 4816/2021) is punished as a rule at the felony level, with imprisonment of up to 8 years and a monetary penalty. The penalty increases to imprisonment of up to 10 years where the unlawful benefit exceeds €120,000, where the perpetrator is a person obliged to report suspicious transactions (notary, accountant, bank executive), or where the predicate offence is a particularly serious felony.
If committed as a profession or by a member of a criminal organisation, the penalty reaches imprisonment of 5 to 15 years. However, where the predicate offence is a misdemeanour, imprisonment of up to 3 years and a monetary penalty are imposed.
2. How can I defend myself when my accounts are frozen by the Authority?
The President of the Anti-Money Laundering Authority issues an order freezing accounts, safe deposit boxes and immovable properties even before criminal prosecution is brought. The affected person has the right to file a petition before the competent judicial council within 20 days from service of the order, pursuant to Article 42(4) of Law 4557/2018, requesting the lifting or limitation of the freezing.
The petition substantiates, by means of bank statements, tax returns and contracts, that the property has lawful origin, that it was acquired before the alleged predicate offence, or that it concerns salaries, pensions and amounts necessary for living. In parallel, revocation of the order is also requested from the issuing authority on grounds of new circumstances.
3. If I am acquitted of the predicate offence, am I also acquitted of laundering?
According to Article 39(4) of Law 4557/2018, the acquittal of the perpetrator for the predicate offence entails as a rule his acquittal also for the offence of legalisation of proceeds. This is an express legislative link which serves the consistency of criminal assessment, since without a prior punishable act there is no «tainted» property to be laundered.
Strategically, the defence line is often directed primarily at overturning the predicate offence (tax evasion, fraud, embezzlement). In addition, the defendant’s knowledge of the unlawful origin at the time of acquisition is contested, since the «bona fide third party» does not commit laundering pursuant to Article 40(1)(c) of the law.
4. Does tax evasion always constitute money laundering as a predicate offence?
No. According to prevailing case law (indicatively Athens Misdemeanours Council 112/2016), in most cases of tax evasion no laundering is constituted, because the enrichment of the tax evader consists in the avoidance of a reduction of his property (non-payment of tax) and not in an increase of assets. The perpetrator’s property already existed as lawful before the tax evasion and does not become «tainted» retroactively.
Exceptions are cases of receipt of refund of VAT or other taxes by deception of the tax authority and the issuance for remuneration of fictitious or forged invoices, where there is indeed an increase of property. The distinction is critical from a defence perspective and must be brought out with clear accounting and legal substantiation from the start of the pre-trial procedure.
5. What applies if I simply deposited the money in a bank account in my name?
The mere deposit of money in a bank account in the perpetrator’s real name, without additional concealment circumstances (false particulars, interposition of shell companies, complex remittances), hardly constitutes the fourth means of commission under Article 2 of Law 4557/2018. Case law (Athens Misdemeanours Council 4304/2015) has held that the inability of the holder to justify the origin of the amounts does not, by itself, suffice to constitute the offence.
Likewise, deposit into a joint account does not automatically entail liability of the joint holder (Athens Court of Appeals Council 349/2015). In any event, however, the picture arising from the totality of transactions is examined as a whole, and the defendant requires specialised defence from the preliminary investigation.
6. What is the role of the lawyer in a money laundering case?
The criminal defence lawyer takes over the defence from the first stage, namely from the moment of freezing of assets or of the summons for the provision of explanations before the Authority. He drafts the petition against the freezing within the 20-day deadline, files a memorandum with bank and tax documents substantiating lawful origin, and represents the client before the judicial council and at the hearing.
In parallel, he assesses the connection with the predicate offence, raises the bona fide third party plea where applicable, contests the perpetrator’s knowledge at the time of acquisition, and proposes mitigating circumstances (Article 84 of the Penal Code (PK)). Timely intervention is critical, as felony charges threaten pre-trial detention and many years of imprisonment.